welcome, but applying it retrospectively is a retrograde measure. The Budget has once again missed the deadline of introducing the DTC and GST, the progressive direct and indirect tax regimes that will have a profound bearing on the economy. "It is perhaps a little worrying that key reforms in the current tax regime introduction of DTC and GST - have once again been postponed. The finance minister could have provided a future roadmap for these important reform initiatives," rues Bharti Enterprises Chairman Sunil Mittal. The DTC seems all set to debut from 2013-14, with a few provisions already put into implementation in the current financial year. However, the GST appears to be a long-drawn battle, yet another victim of partisan politics. One cannot squarely blame the government for the delay in rolling out the GST. Mr Mukherjee has promised to operationalise the nationwide GST network by this August. This does indicate the government's firm resolve in ushering in this piece of tax reform. It is time the other political parties turned reasonable, at least for the sake of national interest. The Budget also mentions contentious issues like foreign direct investment (FDI) in retail and airlines and adds that efforts are on to take all the stakeholders concerned on board. There is little that the government can do in these issues in the light of vicious politicking. The much-needed amendments to a number of crucial financial Bills related to banking, insurance and pension too suffer from the same fate. "India ei-
SUDHIR KAPADIA, ERNST AND YOUNG
NIRMAL JAIN, INDIA INFOLINE
"Changes in law with retrospective effect could be a complete disaster. Even if the Parliament has the ability to amend laws retrospectively, it should not be done as it will impact the credibility of the government."
"If the growth target does not materialise, the fiscal situation will aggravate. Liquidity will remain tight on continued overhang of government borrowings and pressure on long-term bond yields."
ther needs to implement another burst of reforms to lift its underlying economic growth back to an 8 to 9 per cent pace to help fund its ambitious welfare dreams or aggressively cut back spending to prevent a fiscal train wreck down the road. This Budget unfortunately did not chart either of those paths," adds Ruchir Sharma, the MD (Emerging Markets) of Morgan Stanley. Another major concern is on the fiscal consolidation front. The Budget does throw in a realistic fiscal deficit figure. But that target too appears tough, considering the sharp revision of the Budget estimates for fuel and fertiliser subsidies that Mr Mukherjee did for 2011-12. Moreover, he has sharply slashed subsidy outgo for fuel and fertiliser for 201213. This would be a near-impossible task on the back of rising crude oil and fertiliser prices. The only way to curb the subsidies stringently is to bite the bullet, which the government
has been reiterating. "We have to bite the bullet. There is no other way in which you can reduce subsidies. I sincerely hope that when the time comes to take tough decisions, we will take them on board," stresses Prime Minister Manmohan Singh. But the reality suggests that the government lacks teeth to bite the bullet as was quite evident in the Railway Budget fiasco. This was an excellent opportunity for the finance minister to unveil a reforms Budget. The next one will be quite tough as the nation will be heading for general elections in 2014. Of course, a lot of reforms can still be unveiled outside the Budget, in dayto-day administration. However, the miserable rollback of the Railway Budget and a politically-correct general Budget clearly indicate that reforms have got a decent burial, at least for the near future. And that is a major setback for the India story.
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APRIL 2012
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